Report Confirms Budget Reform Desperately Needed in Louisiana

Report Confirms Budget Reform Desperately Needed in Louisiana

By Chris Jacobs

The recent news that Louisiana ran a budget surplus of at least $300 million during the fiscal year that concluded in July should not come as a surprise. For all of the talk about the state’s “fiscal crisis” by some politicians, that term does not apply. Louisiana does not have—and did not have—a fiscal crisis so much as a flawed budget process. Only fixing that policy by rationalizing the state’s budget can create a permanent solution and the kind of fundamental reform necessary to turn the state around.

To some, the budget surplus last fiscal year proves that the Louisiana Legislature had no reason to impose a tax increase of nearly half-a-billion dollars during the special session in June. But, had the state run its affairs in a rational and transparent fashion, the Legislature would have recognized early on that Baton Rouge has no need to take more of citizens’ hard-earned dollars.

As of July 2017, Louisiana held nearly $6 billion in a series of budgetary funds. While some of those funds—the state has nearly 400 in total—contain no money, others contain literally hundreds of millions of dollars.

No business in its right mind would manage its accounts like this, with money lying around in hundreds of separate accounts. And, what family would operate their household in the way Louisiana does—scrambling to make payments on their mortgage, while leaving thousands of dollars in a separate bank account to pay the cable bill? Continuous tax hikes, while hoarding literally billions of dollars in 400 separate accounts, only makes sense to the politicians in Baton Rouge who want to sink their claws deeper into the pocketbooks of Louisiana families.

News of the surplus should inspire reforms that rationalize the state’s budget process, so that Louisiana families never get socked with another unnecessary tax increase again. First, the Legislature should require more vigorous reporting on the state’s financial condition. The governor, Louisiana’s chief executive, should disclose budgetary details—both receipts and spending levels—on a monthly basis. No official should have the ability to “sit on” positive (or negative) fiscal information in an attempt to deceive the Legislature into passing its policy priorities.

Second, the Treasurer should disclose the balances of each of the 400 managed funds on a monthly basis. This added measure of transparency will highlight the billions of unspent dollars currently sitting in accounts.

The Legislature should use this newfound transparency to begin rationalizing the budget process. Eliminating and consolidating many of the 400 funds holding billions of dollars will make Louisiana’s budget more rational, transparent and open. It will also free up cash flow to bolster the state’s “rainy day” fund. Ironically, even as the state sits on nearly $6 billion in almost 400 separate accounts, the “rainy day” fund holds a mere fraction of that total.

Make no mistake: this surplus confirms that Louisiana families suffered another entirely unnecessary tax increase earlier this year. Hopefully, it will also prompt the Legislature to enact reforms that make this the last one. Louisianans deserve the relief.

Mr. Jacobs is a Senior Fellow with the Pelican Institute, and Founder and CEO of Juniper Research Group, a policy consulting firm.

Want more? Get stories like this delivered straight to your inbox.

Thank you, we'll keep you informed!